Times Interest Earned

The following data were taken from recent annual reports of Caliber Company, which operates a low-fare airline service to more than 50 cities in the United States:

	Current Year		Prior Year
Interest expense	$49,000		$53,000
Income before income tax expense	362,600		286,200

a. Determine the times interest earned ratio for the current and preceding years. Round to one decimal place.

Current year	fill in the blank 1
Prior year	fill in the blank 2

b. Although Caliber Company had enough earnings to pay interest in the prior year, the

improvementreduction

in this ratio will be

unwelcomedwelcomed

by the debtholders.